They are almost definitely breaking the "EQUALITY ACT 2010"
From the govenment's guide on this legislation:
The general position is that it is unlawful for an employer to ask any job applicant about their health or disability unless and until the applicant has been offered a job.
This legislation was added to prevent discrimination against disability by asking health related questions prior to offering the position. There are caveats and questions which may be allowed or technically permissable, but in general - the safest position for any employer is to not ask or try to find out about the candidate's health prior to making a decision.
As such, you are absolutely right to see that reference request as a huge red-flag (and it's very much a sign of your good character you noticed the potential issue with it).
Note the above quote is from a guide for easier reading, and as such the wording assumes it is an applicant that recieves the discriminatory question directly. However, in the actual legal act itself, no distinction is made. I am confident that asking the question indirectly (via a reference) is equally illegal - even if the candidate is never aware it was asked.
(1)A person (A) to whom an application for work is made must not ask about the health of the applicant (B)—
The specific times you can ask about health prior to a job offer are:
- To establish whether the applicant can take part in an assessment to determine their suitability for the job
This does not apply in your case, as it needs to be a specific assessment they are being asked to complete. For example "Are you able to undertake an assessment to demonstrate you can climb scaffolding safely?". It cannot be a general health question.
- To determine whether any reasonable adjustments need to be made to enable a disabled person to participate in an assessment during the recruitment process.
This also does not apply in your case. Again, it must be a specific question to the applicant about whether they need adjustments made for a specific task. "We need you to perform a practice customer call as part of the interview; are there any health/disability accomodations you require for this?".
- To find out whether a job applicant
would be able to undertake a function that
is intrinsic to the job
An intrinsic function of a job is a function which, if it
could not be performed, would mean that the job
could not be carried out
Again, there has to be a specific reason for asking and the question must be specific to that reason. You cannot ask general health/disability questions.
- To monitor diversity among job
Monitoring information should be kept separate from
application forms in order to minimise the risk that
this information will influence the selection process
The employer writing to you, has made it abundantly clear they are using this information to make a hiring decision. As such, this does not apply. It also should not be collected from previous employers, but at the candidate's discretion.
- To support “positive action” in
employment for disabled people.
Again, the employer specifically asked for health issues that would prevent the employee undertaking the job - this does not apply. Also, this should come from the candidate themself, and not a previous employer.
- If there is an occupational requirement
for the person to be disabled.
Very clearly, this is not applicable to your request.
Although this hasn't impacted you directly, you may wish to take this further with the Equality and Human Rights Commission:
If a person thinks that an employer has acted
unlawfully by asking questions about health or
disability that are not permitted, the person
can complain to the Equality and Human
Rights Commission, which has powers to take
enforcement action against the employer. A person
does not need to have a disability to complain to
the Equality and Human Rights Commission in this